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VMWare in talks to buy Pivotal Software; both controlled by Dell

VMWare in talks to buy Pivotal Software; both controlled by Dell

FILE PHOTO: The Pivotal Software logo is pictured on the floor of the New York Stock Exchange in the Manhattan borough of New York City, New York, U.S., April 20, 2018. REUTERS/Brendan McDermid (Reuters) – VMware Inc ( VMW.N ) and Pivotal Software Inc ( PVTL.N ) are negotiating a deal for VMWare to acquire Pivotal, according to a regulatory filing from Dell Technologies Inc ( DELL.N ) on Wednesday, valuing Pivotal, a maker of software development and management tools, at about $4 billion.

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Pivotal shares jumped 63% to $13.60, while shares of VMWare were down about 3% at $148.25 in extended trading. Dell is the controlling stockholder for both the companies. Dell’s shares dropped 1.65% to $47.80 in after-market trading on Wednesday.

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Special board committees at both companies are negotiating an agreement to acquire all of the outstanding shares of Class A stock of Pivotal for cash at $15 a share, according to a regulatory filing.

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The offer price represents an 81% premium to Pivotal’s Wednesday close. Shares of Pivotal, which provides tools for software developers working with cloud services from different companies, have fallen 49% this year.

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VMWare provides cloud computing and virtualization software and services

Pivotal confirmed that it was in discussion with VMWare but said a definitive agreement between the companies has not been executed

The VMware Special Committee has requested that Dell exchange Pivotal Class B stock for VMWare Class A stock

Dell and the VMware special committee are discussing a to-be-agreed upon exchange ratio, the regulatory filing showed

Michael Dell and Dell owned 131.3 million shares of Pivotal Class B stock, not including the 44.2 million shares of Pivotal Class B stock held by VMware, according to the filing

Reporting by Ankur Banerjee in Bengaluru; Editing by Cynthia Osterman